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  • Omar Khan, Andrea Feigl, Jenna Patterson, and David Watkins

Blending resources to fund the NCD fight in LMICs

As low- and middle-income countries struggle to tackle the growing burden of non-communicable diseases, targeted deployment of ‘blended finance’ promises to fill the funding gap left by development or public finance by roping in private resources

The gap in the health financing needed to achieve the 2030 Agenda for Sustainable Development is devastatingly wide and covid-19 has further exacerbated the shortfall. National health spending alone cannot fully fund universal health coverage (UHC) as a part of Sustainable Development Goal 3 (SDG3), with the largest funding gap seen in the already underfunded area of non-communicable diseases (NCDs). Necessitated by the covid-19 pandemic, total official development assistance (ODA) rose by 3.5% between 2019 and 2020, amounting to US$161.2 billion with preliminary investments in covid-19 response.

Development assistance for health (DAH) remains uncertain beyond the pandemic response and, therefore, alternative financing mechanisms such as blended finance present an opportunity to expand interventions focusing on the prevention and treatment of NCDs and other health conditions, particularly in low- and middle-income countries (LMICs). Blended finance has been used as an umbrella term for financing mechanisms where ODA and capital from other public or philanthropic sources are used to de-risk entry and mobilise private sector investment. Although different stakeholders have different definitions—for example, development finance institutions (DFI) and the Organisation for Economic Co-operation and Development (OECD) differ on whether the additional finance can be private or public—the central premise of blending concessional ODA with other financial sources remains the same.

DAH in 2019 was US$40.6 billion, with only US$375 million committed to NCDs. Given that annual domestic health expenditure as a percentage of GDP is projected to decrease—due to covid-19-driven GDP contraction —by 6.3% in low-income countries (LICs), 4.1% in middle-income countries (MICs), and 3.9% in upper-middle-income countries (UMICs), the uptick in ODA—much of which is pandemic-response assistance—will not be sufficient to hit SDG3 goals.

Not only is there a significant gap between DAH and health system requirements globally, but disaggregated aid inflows also highlight the gap in DAH for MICs. At present, there is little research on how health financing prioritisation occurs as a country transitions from LIC to MIC. Trends analysed by the Global Burden of Disease Health Financing Collaborator Network found that DAH was increasing for LICs alone, and MICs often fill the gap with out-of-pocket expenses, which grows as a proportion of health expenditure. Furthermore, when modelling the financing of disease control priorities (DCP) interventions, the NCDI Poverty Commission found that the gap in financing NCD interventions was US$52 per capita for LICs and US$84 per capita for MICs. While the best-case projection for MICs is an increased capacity for health financing, the gap between current health financing and NCD targets is greater than in LICs, likely due to the rising double-burden of infectious and non-communicable diseases in these countries.

Even though DAH tends to be focused on LMICs, the NCDI Poverty Commission found it was historically primarily directed at HIV/AIDS and maternal, newborn, and child health in the 55 lowest-income countries, with only 0.3% directed at NCD prevention, treatment and care. The complex and decentralised nature of DAH reflects a broader gap in our understanding of targeted financing. While the 2019 Global Burden of Disease Health Financing Collaborator Network publication aims to understand the changes in health financing in countries transitioning out of LIC status, what remains under-researched are the intricacies in agenda setting and prioritisation, as well as the specific needs of countries or disease (particularly NCD) burdens. The rising double-burden of infectious and non-communicable diseases in LMICs necessitates understanding NCD financing and global health prioritisation to pinpoint the gaps that may leave SDG3 unmet.

Innovations such as blended finance are finding favour to address gaps in health financing. Since an estimated US$274 billion more must be invested in health systems annually until 2030 to achieve SDG3 targets, there is need for financing mechanisms beyond the traditional DAH model. However, what is less understood is where blended finance can fit into the health financing landscape, particularly for NCDs, which often have complex care cascades. The Health Finance Institute and collaborators from the University of Washington conducted research aimed at better understanding where blended finance may be effectively applied as part of NCD interventions and, in turn, address the NCD financing gap and catalyse public-private stewardship of health financing.

Mind the funding gap

The Global Burden of Disease Health Financing Collaborator Network found that health spending increased by 4% between 1995 and 2016, primarily due to government spending in UMICs and ODA in LMICs. A 2017 review of DAH explored the broader implications for global health finance in the future, and how DAH trends and the Sustainable Development Goals (SDGs) are shaping the current debate around health financing. The review notes that while DAH likely had a significant positive impact, such as in malaria control and HIV response, it has faced two challenges since the 1990s—the economic growth of LICs to MICs, and the ‘health transition’, where developing countries are increasingly affected by the double burden of infectious diseases and NCDs.

Critiques of the DAH system include policy implications and the financing mechanisms. The criticisms around priority setting include the manner in which it is set and who sets it, the lack of coordination between different actors, and poor accountability. The financing mechanisms are seen as inadequate, volatile, or additional, in that they may directly displace domestic financing. The critiques also raise the question of ‘who should pay’, and highlight the growing disconnect between the sentiment that ‘countries should levy more taxes’ and their ability to do so, and the waning global solidarity towards supporting urgent and chronic health needs transnationally.

The critiques of the DAH system shed light on the NCD funding gap, as NCDs are critically underfunded when compared with their proportional burden. This underfunding appears particularly stark when looking at DAH distribution—according to the Institute for Health Metrics and Evaluation, NCDs cause 60% of disability-adjusted life years (DALYs) and 70% of global death but receive less than 2% of ODA. Furthermore, the underfunding of NCDs does not affect countries equally—the risk of dying prematurely due to an NCD is almost double in LMICs than in high-income countries (HICs), highlighting the need to address the gap especially in countries that are ODA- or DAH-dependent. It has been argued that efforts to achieve SDG3.4 (reduce premature deaths due to NCDs by one-third) have been hindered by the NCD funding gap over the past decade. A combination of policy and financing solutions are needed to reform the DAH model and, more specifically, tackle the NCD funding gap.

Mix-and-match funding sources

Innovations such as blended finance must be considered to address the critiques of the DAH system and the gaps it leaves. Fortunately, these mechanisms are growing more viable due to increased use and therefore more generated evidence, as seen in green energy development. Innovative financing instruments were increasingly deployed for global health between 2002 and 2015, generating US$9.8 billion. Blended finance has grown substantially, from a market size of US$16 billion in 2007 to US$136 billion in 2018.

The recency of blended finance’s rise (its US$50-billion finance market was considered “early stage” in 2018) means that more evidence is needed to clarify its role in newer areas and contexts.

Currently the health sector accounts for just 6% of blended finance transactions, although Convergence expects that share to increase sharply. NCDs have not been a focus for blended finance, which has tended to focus on health infrastructure and vaccine financing. Although several key projects are using blended finance to address NCDs, such as the Diabetes Social Impact Bond in Israel, there is little guidance for this as NCDs are often seen as high-risk due to the complex care cascades and long timeframes required to track success.

The World Health Organization’s Global Coordination Mechanism on the Prevention and Control of Noncommunicable Diseases laid an initial, high-level groundwork for understanding how blended finance can support long-term financing but did not address key dimensions of potential NCD projects and whether blended finance is a good fit for them.

Given the novelty of using blended finance to address NCDs, the Health Finance Institute and collaborators from the University of Washington attempted to define the conditions in which it could be effective. As a part of this effort, the research team undertook case studies focusing on the potential of blended finance in improving access to childhood cancer care, type 1 diabetes (T1D) monitoring technologies, and primary care.

Blended finance for NCD care

The research team used a selection of published blended finance projects with different financing mechanisms to cover a diversity of projects, geography, and health topics. The most recent recommendations of the Disease Control Priorities Project (DCPP) were also reviewed to generate a list of cost-effective NCD interventions that could be supported through blended finance.

The results show clear differences between various blended finance projects depending on the income of the country. Blended finance projects in LMICs have focused on investments in health facility, such as the Cataract Bond of Cameroon or the Utkrisht Bond of India. In HICs they have focused on population-level health policies and multimodal approaches to behaviour change to improve outcomes for specific NCDs, such as the T2D Impact Bond of Israel or AIM4Fresno in the US. Country income level is an important differentiator as blended finance projects for multimodal population health may be difficult to implement in resource-constrained settings with fewer interoperable digital health technologies.

A majority of the blended finance projects analysed were found to be focused on improving services. This is important thematically, especially when compared with other financing models such as donor-based or domestic financing, which cover a diverse range of interventions and investments. The focus on high-quality service aligns with the structure of blended finance projects, which often require data capability and quality indicators to measure outcomes and offer a different type of accountability compared with any other financing mechanism.

One question that arose from the study is the potential for blended finance to support commodities procurement. COVAX remains one of the largest blended finance projects in scale and commitment, although it is still driven by donor financing. Ultimately, we need more evidence on the value of country-level commodities procurement finance via innovative instruments.

Case study: Childhood cancer

Although published data cite that childhood cancer represents a small proportion of all cancers (1-2%), recent findings suggest this proportion is higher in countries with lower human development index (HDI) scores, highlighting the need for LMIC-oriented research and care provision. Much of the current research is focused on childhood cancer prevalence and its impact on the health system, and the resultant new data are helping prioritise childhood cancer care in LMICs and across global agendas.

There is a growing body of evidence on the cost-effectiveness of childhood cancer care globally. For example, using the WHO-CHOICE (World Health Organization-Choosing Interventions that are Cost-Effective) framework, the cost to avert one disability-adjusted life year (DALY), representing the loss equivalent to one year of full health, at the paediatric cancer unit of Nacional de Ninos Benjamin Bloom in El Salvador in 2016 was estimated to be cost-effective at US$1,624 compared to the GDP per capita of US$3,870. Additionally, the cost to avert one DALY at the Korle-Bu Teaching Hospital’s paediatric cancer unit in Ghana was estimated to be cost-effective at US$1,034, less than the Ghanaian GDP per capita. While these estimates are more widely available now, building political will to tackle childhood cancer remains a challenge, with policy formulation and prioritisation dependent on external or uncontrollable factors. Key stakeholders have emphasised that financial mechanisms must be built to address childhood cancer in LMICs, but such discussions have centred around governmental policy. The use of blended finance to address childhood cancer in LMICs is promising, given the cost-effectiveness of interventions, the need to sustainably finance the treatments and technologies required, and the need to close diagnostic gaps. There is growing support for the argument that childhood cancer interventions in LMICs, if de-risked, could be attractive to private sector investors due to the relative profitability.

Before exploring opportunities for blended finance in childhood cancer care, it is important to articulate the care cascade in LMICs. Gaps in the quality of treatment start at the point of diagnosis and continue through to treatment and outcomes. Analysing these gaps is complicated as high-quality data is needed to draw meaningful conclusions, which is challenging given the comparatively low prevalence rates. Researchers are using modelling techniques to work around the data issue. The Global Childhood Cancer microsimulation model was used to identify the gap between country-level projected cases and diagnosed cases, and it found that major diagnostic gaps are in sub-Saharan Africa and South Asia. Another recent review of the use of traditional and complementary childhood cancer treatments in LMICs found a high prevalence in LMICs, but with no causal relationship between the dual models of treatment and treatment abandonment or delay. One global survey of cancer care providers found that for 10 different childhood cancers, treatment abandonment was higher in LMICs as compared to HICs, and attributable to high treatment costs, long travel times to care centres, and lack of parental education. In addition to treatment abandonment, other studies have noted a huge disparity in the outcomes of childhood cancer care corresponding to country income levels, with reported 80% survival rates in HICs and 10-50% in LMICs.

The stark gaps in the quality of childhood cancer treatment across country income levels is largely linked to global funding patterns. A review of global patterns in public and philanthropic funding for childhood cancer research between 2008 and 2016 found underfunding in proportion to the burden of the disease as compared to adult cancer research. The study also found a critical lack of both funders and research recipients in LMICs, particularly in South America, Southeast Asia, and sub-Saharan Africa. Lack of access to effective chemotherapy and low-quality delivery are key barriers to childhood cancer care in LMICs, and these are inextricably linked to issues of financing, procurement, and market dynamics. In 2018, the WHO launched the Global Initiative for Childhood Cancer, which aimed to double the global survival rate to 60% for all children diagnosed with cancer by 2030. This would require data-informed, system-wide policy changes and prioritisation in LMICs. Countries such as El Salvador and Guatemala have begun to prioritise childhood cancer care primarily through grassroots movements, while the Philippines is using top-down policy changes; a blend of both approaches played a key role in India’s recent childhood cancer care efforts. In Latin America, pan-regional spaces and institutions have played a key role in knowledge-sharing and building political will to tackle childhood cancers. While substantive and multi-pronged policy reform is necessary to ensure sustainable improvement in childhood cancer outcomes, each country has specific, complex barriers to building political will, and many LMICs fail to prioritise childhood cancer care enough to find ways to bridge the gaps in funding.

Blended finance is seen well-positioned to address the gaps in childhood cancer care in LMICs. As of writing, the only publicly published blended finance project addressing childhood cancer involves funding by the European Commission for the pharmaceutical company Midatech to develop a new technology to treat diffuse intrinsic pontine glioma in children. While this project is focused on a neglected disease in an HIC base, it shows the potential for blended finance to assist in developing new childhood cancer technologies. In addition to advancing innovation, blended finance can help LMICs build clinical capacity to address childhood cancers, similar to Cameroon’s Cataract Bond, or other IFC-funded blended finance projects to expand hospital facilities. The Partners in Health-founded Butaro Center demonstrates how technical assistance can bolster workforce capacity in childhood cancer care. Ultimately, the cost-effectiveness, growing relative burden, and focus on commodities in childhood cancer treatment are creating a landscape that is favourable to blended finance investments.

Case study: Type 1 diabetes

Many LMICs are unable to provide what international bodies classify as "comprehensive" care for type 1 diabetes (T1D) due to limited resources. In addition to patient and provider education, which is essential given the complexity of T1D, access to commodities including insulin and glucose monitoring devices plays a key role in glycaemic control. Significant reform is needed to expand access to comprehensive T1D care, especially in MICs where national health insurance schemes do not cover glucose monitoring devices. Amid new initiatives in insulin procurement, literature exploring the cost-effectiveness of blood glucose meters and test strips in LMICs, and growing evidence of the value of technologies such as continuous glucose monitors (CGMs), it is clear that sustainable and affordable procurement is crucial in ensuring access to quality T1D care in LMICs; this, in turn, highlights the potential for blended finance to bring together multiple stakeholders and finance commodities even as more sustainable policy reforms are put in place. Furthermore, a new study shows that ease of using CGMs can help overcome gaps in patient education.

Guidelines from the International Society for Pediatric and Adolescent Diabetes (ISPAD) and others have established what comprehensive care looks like in HICs where full coverage is part of national health systems. However, even as HICs see improving care due to new technologies for glycaemic control, many LMICs still struggle to procure fundamental commodities including insulin and blood glucose test strips. Research on haemoglobin A1C control (HbA1C) in sub-Saharan Africa shows that a majority of diabetic patients in rural areas do not own any kind of blood glucose monitoring devices and depend on clinic visits for readings, which is fundamentally unaligned with best practice guidelines for monitoring blood glucose trends. Given these findings, Ogle et al, in 2019, sought to define levels of care in LMICs including availability of blood glucose monitoring; insulin type, delivery, and frequency; complications in screening; diabetes education and team care; intra-clinic range of mean HbA1C; mortality and complications. The classification not only helps identify the varying quality of care for T1D and links it to economic context and accessibility, but also provides a framework for research on the cost-effectiveness of various interventions to expand access to essential technologies for T1D patients. When countries achieve 'intermediate care', 30-year survival rates are estimated to improve 27-41%. Furthermore, using the WHO-CHOICE framework, access to “intermediate care” with daily blood glucose monitoring has been found to be cost-effective, with the cost per DALY averted ranging from 17% of GDP per capita in Bolivia to 15.6% in Azerbaijan. Despite limitations in local data, particularly on the prevalence of T1D complications in LMICs, building evidence on the cost-effectiveness of ‘intermediate care’ is essential to improve access to key commodities.

Access to insulin and blood glucose meters is the key difference between 'minimal' and 'intermediate' care, and the challenges in the global market and their impact on procurement for LMICs are well-researched. The cost of two to four test strips per day for self-monitoring blood glucose devices can exceed that of annual insulin supply in most LMICs. This challenge is further complicated by the need to buy a specific brand of test strip for a specific brand of glucose monitor, as the numerous brands in the market lack harmonisation. A recent global market analysis by the Clinton Health Access Initiative (CHAI) shows that mark-ups on monitors and test strips by distributors, and due to import tariffs and sales taxes, make them more inaccessible in LMICs.

New research on CGMs promises an opportunity to leapfrog the need for test strips, leading to better patient outcomes including fewer severe hypoglycaemic events, higher patient satisfaction, and less work absenteeism. Ease-of-use of CGMs could reduce the burden on caregivers; moreover, CGMs require fewer replacements compared to the number of SMBG test strips needed per day. However, there are challenges in manufacturing CGM sensors, which limits their availability in LMICs. Given this, blended finance should look to support T1D commodity procurement in LMICs. Much of the insulin entering LMICs is through donations such as Eli Lilly's commitment to Life for a Child (LFAC), to expand support to 150,000 youth with T1D from 23,000 over the next decade. Apart from donation, the WHO is exploring a prequalification programme to introduce insulin from more companies to LMICs at lower prices. There is compelling reason to deploy blended finance to improve access to blood glucose meters and test strips or CGMs in LMICs.

Primary care

There is a growing global focus on strengthening primary care through the lens of Universal Health Coverage, highlighting primary care’s role in closing coverage gaps, building on a long history of championing primary care that began in 1978 with the Alma Ata Declaration. Furthermore, the impact of the covid-19 pandemic has spurred many key stakeholders to move to rapidly strengthen primary care. The World Bank recently released a key report, ’Walking the Talk: Reimagining Primary Health Care After COVID-19‘, which spelt out the steps needed, including high-quality comprehensive care, person-centred integration, addressing inequities, and building health system resilience. To achieve these goals, the World Bank highlighted the need to finance primary health care. While there are well-defined examples of blended finance’s impact on primary care, efforts thus far have been focused on commodities procurement such as AMCs for vaccinations, thereby highlighting the need to find ways of supporting system-wide efforts.

While childhood cancer and T1D have clearly defined care cascades and targets for improving access and quality, primary care strengthening often requires a systems-level analysis and approach. Nonetheless, primary care improvement is central to addressing NCDs, particularly in LMICs, where health systems are underfunded and DAH has historically focused on infectious diseases. In LMICs, prevention and diagnosis remain huge barriers to NCD care, and the complex nature of NCD (numerous co-morbidities and other complicating factors) implies primary care health systems must be reorganised to focus on integrated, continuous care. The reform requires a broad scope of investment—financial, political, and human.

In order to understand how primary care can be reformed, it is important to analyse current primary care financing in line with the World Bank’s objectives. Primary care financing is complex and often fragmented, dependent on the systems in different countries. For example, in India there is a divide between government-financed primary care, and non-governmental primary care initiatives that are often financed through a combination of donations and grants. While primary care itself can provide financial protection from high out-of-pocket expenses, it remains underdeveloped in many LMIC contexts. Stenberg et al, in 2019, note that on average an additional US$48 per capita is needed to strengthen primary care on the road to UHC, which is more than what many LMICs spend on their entire health budget. DAH cannot be relied on for primary care financing as it has never been prioritised in donor efforts due to the difficulty in quantifying outcomes.

A recent analysis of primary care systems in eight countries (Haiti, Kenya, Malawi, Namibia, Rwanda, Senegal, Tanzania and Uganda) showed no correlation between structural inputs and quality of health outcomes. Given the complexity of health systems, particularly in resource-constrained settings, variables ranging from economic conditions to the political organisation of primary care can have downstream impacts on health outcomes. Blended finance solutions for primary care should aim to link commodity investments to process indicators such as improving referral mechanisms or programme enrolment, rather than health outcome indicators. Electronic medical records (EMR) offer an opportunity to invest in commodities to strengthen primary care as the technology is often missing or fragmented in LMICs and it is a discrete intervention whose cost-effectiveness could be modelled. For example, evidence is emerging that EMRs have the potential to improve diabetes care coordination and quality of care in primary care settings. When financing specific commodities towards strengthening primary health care, blended finance models must also consider healthcare workforce capacity, equitable access, and additional context-specific financing needs.

Keep talking

Blended finance’s proven value in improving the quality of NCD care through multiple types of investments should be of note to private sector stakeholders. The potential impact of blended finance in supporting commodities procurement remains relatively untested but is very necessary to implement DCP interventions and reach global goals.

The case studies demonstrate the spectrum of NCD investments and the different ways in which blended finance may be applied impactfully. In addressing childhood cancer, investing in health facility development is a well-defined path for blended finance interventions thanks to a robust body of research articulating the cost-effectiveness of such projects. Given the evidence that commodity investments are a well-defined path for blended-finance interventions, T1D has many different investment opportunities as long as the complex and changing markets for both insulin and blood glucose monitoring devices are well thought through. However, primary care demonstrates the challenge in using blended finance to strengthen systems. Primary care reform requires investment that may go beyond the feasibility of blended finance mechanisms, and evidence on the impact of targeted structural investments on primary care outcomes is not conclusive.

With few blended finance efforts in or adjacent to NCD funding, there is still not enough evidence to rigorously define the terms of a ‘successful’ blended finance investment for NCDs. Nonetheless, it is important to find ways to include the discourse on blended finance for NCDs in global financing conversations.

Omar Khan, MPH, is a recent MPH graduate from the Harvard TH Chan School of Public Health and former Global Health Corps fellow interested in health systems strengthening in low-resource contexts.

Jenna Patterson, PhD MPH, is the lead Health Economist at the Health Finance Institute. Previously, Patterson has worked across public and private sectors with the aim of bringing together key stakeholders with a unique approach in valuing and financing healthcare.

Andrea Feigl, PhD MPH, is founder and CEO of Health Finance Institute, as well as scientific adviser to the Lancet Commission on NCDIs and Poverty. Previously, Feigl was a health economist with the OECD and at the Harvard TH Chan School of Public Health.

David Watkins, MD, MPH, is an associate professor at the University of Washington, Department of Global Health, and a senior researcher with the Disease Control Priorities Network. Watkins is working on priority setting for universal health coverage in highly resource-constrained countries and with particular areas of methodological expertise in health policy analysis and economic evaluation, descriptive epidemiology, and mixed- and multiple-methods health services research.

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